U.K. Home-Price Index Falls to Lowest in a Year as Sales Decline

The property market is under pressure as banks curtailing access to finance and the continuing recession deter prospective buyers. Photographer: Paul Thomas/Bloomberg

Aug. 14 (Bloomberg) -- A U.K. house-price index dropped to
the lowest in a year as property transactions fell for a fourth
month, the Royal Institution of Chartered Surveyors said.

The price gauge fell to minus 24 from minus 22 in June,
London-based RICS said in a report today, citing a monthly poll
of property surveyors. A reading below zero means more surveyors
saw price drops than gains last month. Measures of newly agreed
sales dropped to a four-year low.

The property market is under pressure as banks curtailing
access to finance and the continuing recession deter prospective
buyers. The Bank of England started a program this month to
boost the flow of credit as it continued its bond-purchase
program aimed at sparking a recovery.

“The outlook for the next three months remains broadly
unchanged,” RICS said in the statement. “The longer-term 12-month outlook shows a marked deterioration, with both price and
sales expectations now negative.”

RICS’s measure of newly agreed sales fell to minus 20 in
July from minus 13 in June, and a gauge of new instructions to
sell property dropped to minus 15 from minus 12. Some surveyors
said the market was affected by the London 2012 Olympics, which
started at the end of the month.

“A combination of summer holidays and Olympics has meant
that activity has slowed,” James Gubbins, a real-estate agent
in the Westminster area of London, said in the statement.

A gauge of three-month sales expectations rose to 14 from
11, while a measure of price expectations for the period dropped
to minus 23 from minus 18. A measure of the price outlook for
the next year also declined, to minus 24.

London Gains

The only region tracked by RICS to show an increase in
prices over the last three months was London, at 18. Northern
Ireland was the worst performer, at minus 68.

Britain’s economy has contracted for the past three
quarters, and Bank of England Governor Mervyn King wrote in a
newspaper article published on Aug. 12 that while the Olympics
may boost confidence, they “cannot alter the underlying
economic situation” as the euro-area debt crisis drags on.

The central bank held its bond-purchase program at 375
billion pounds ($588 billion) this month, and left its key
interest rate at a record low of 0.5 percent. Minutes of the
decision will be published at 9:30 a.m. in London tomorrow.